Silverlake Axis

Silverlake Axis: 1H13 net profit increased 22% to RM88.8m, but revenue decreased 11% to RM181m. Sales of software and hardware products were lower as two large sales of hardware products recorded in 1H12 were not repeated in 1H13. With robust contributions from higher margin activities, namely software licensing and maintenance and enhancement services, gross profit improved 12% to RM112.3m despite the lower group revenue. The change in revenue mix lifted gross profit margin from 49% in 1H12 to 62% in 1H13. The Group benefited from a net foreign exchange gain of RM1.1m as well as lower effective tax rate as a result of higher contribution from tax-exempt income from software licensing and the lower taxable income in 1H13. Company is trading at 15x P/E.